Correlation Between Wingstop and Dominos Pizza
Can any of the company-specific risk be diversified away by investing in both Wingstop and Dominos Pizza at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Wingstop and Dominos Pizza into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wingstop and Dominos Pizza Common, you can compare the effects of market volatilities on Wingstop and Dominos Pizza and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Wingstop with a short position of Dominos Pizza. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wingstop and Dominos Pizza.
Diversification Opportunities for Wingstop and Dominos Pizza
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Wingstop and Dominos is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Dominos Pizza Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominos Pizza Common and Wingstop is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Wingstop are associated (or correlated) with Dominos Pizza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dominos Pizza Common has no effect on the direction of Wingstop i.e., Wingstop and Dominos Pizza go up and down completely randomly.
Pair Corralation between Wingstop and Dominos Pizza
Given the investment horizon of 90 days Wingstop is expected to under-perform the Dominos Pizza. But the stock apears to be less risky and, when comparing its historical volatility, Wingstop is 1.27 times less risky than Dominos Pizza. The stock trades about -0.22 of its potential returns per unit of risk. The Dominos Pizza Common is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 42,764 in Dominos Pizza Common on October 20, 2024 and sell it today you would lose (29.00) from holding Dominos Pizza Common or give up 0.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wingstop vs. Dominos Pizza Common
Performance |
| Timeline |
| Wingstop |
| Dominos Pizza Common |
Wingstop and Dominos Pizza Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wingstop and Dominos Pizza
The main advantage of trading using opposite Wingstop and Dominos Pizza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wingstop position performs unexpectedly, Dominos Pizza can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dominos Pizza will offset losses from the drop in Dominos Pizza's long position.| Wingstop vs. Papa Johns International | Wingstop vs. Chipotle Mexican Grill | Wingstop vs. The Wendys Co | Wingstop vs. Dominos Pizza Common |
| Dominos Pizza vs. Yum Brands | Dominos Pizza vs. The Wendys Co | Dominos Pizza vs. McDonalds | Dominos Pizza vs. Wingstop |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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